The Ely Central property consists of more than 490 acres. Years before, in the early days of the camp, it had been passed over by the geologists and promoters who selected the ground for the Nevada Consolidated, Giroux and Cumberland-Ely, because it was covered by a non-mineralized formation called rhyolite. As development work progressed and the enormous value of the surrounding mines was disclosed, it dawned on their owners that they might have made a mistake and that it would be just as well to obtain possession of the Ely Central property.
The ground was especially valuable to the Nevada Consolidated, if for no other reason, as mere acreage to connect up and make compact the properties owned by them. The second demonstration of their bad judgment was the fact that, having planned to mine the Copper Flat ore-body by the steam-shovel method, they overlooked the value of the Ely Central property as affording them the only practical means of access to the lower levels of that pit for operation by the steam shovels.
Investigation had disclosed to me that the evidence which had been adduced by mine developments on neighboring properties was all in favor of copper ore underlying the Ely Central area. The rhyolite, which covered Ely Central, was a "flow," covering the ore, and not a "dyke," coming up from below and cutting it off.
Why was the property idle? Inquiry revealed that the Ely Central Copper Company was $89,000 in debt, and that a pre-panic effort to finance the corporation for deep mine development had failed. The panic of 1907-8 had crimped the promoters and they could not go ahead.
The Scheftels corporation entered into negotiations with the Pheby brothers and O. A. Turner, who held the control, for all the stock of the Ely Central company that was owned by them. During the progress of negotiations, early in July, 1909, I heard that the Guggenheims and W. B. Thompson were very much put out to learn that the Scheftels company was about to finance the company. They had belittled the value of the property, as would-be buyers are prone to do the world over.
Before I entered upon the scene the Pheby brothers had found themselves objects of persistent and mysterious attacks. Their credit was assailed in every quarter and they found themselves ambushed and bushwhacked in every move they made. They were forced into a position where it was believed they would accept anything that might be offered them for their interest in Ely Central. As fate would have it, the Scheftels company entered the race at this psychological moment.
Summed up, the Scheftels company actually contracted for 1,280,571 shares out of 1,600,000, which represented the increased capitalization for a total sum of $1,158,916, or at an average price of 90½ cents per share. The time allowed for the payment of all the money was nine months, stipulated payments being agreed upon at regular intervals in between. The immediate effect of the arrangement was this: A dormant property, in debt and lying fallow, was metamorphosed into a going concern with good prospects of soon becoming a proved great copper mine, with an assured income to defray the expenses of deep mine development on a large scale, and a market career ahead of it that might be expected to match any that had preceded it in the Ely district from the standpoint of public interest.
During the progress of the negotiations the stock sold up to $1 per share. The selling for Philadelphia account of a large block of stock in the open market dropped the price back, of a sudden, to 50 cents. The Scheftels company bought stock on this break and urged its customers to do likewise. On the day the deal was concluded the market had rallied to 75 cents. Fully six weeks before the deal was arranged the Scheftels Market Letter and the Mining Financial News had begun to urge the purchase of the stock. The Scheftels organization was not hoggish. The establishment was willing that the public should get in on the cellar floor. There were nearly 300,000 shares outstanding, which the Scheftels corporation had not corralled in its contract.
Readers of the Market Letter and the Mining Financial News fell over one another to get in on the good thing. Therein they were wise. By early September the price had advanced in the market to $1. The Scheftels publicity was strong in favor of the stock. But it had not yet put on full steam. It was waiting for an engineer's report to make doubly sure it was right.
Col. Wm. A. Farish, a mining engineer of many years' experience and a man with a high reputation throughout the whole of the Western mining country, had been sent by the Scheftels company to make a report on the Ely Central. Years before Colonel Farish had reported on the Nevada Consolidated properties and outlined the very methods now being used for recovering its ores. But Colonel Farish had been ahead of his time, and the capitalists in whose interest he was acting were not prepared for such a radical step in advance of the then-existing methods, nor to believe that copper ores of such low grade could be mined at a profit, especially 140 miles from the nearest railroad. Times and conditions changed, and the 140 miles were spanned by a well-equipped rail connection.